NEW GOVERNMENT ACCOUNTING SYSTEM (NGAS)

1. NEW GOVERNMENT ACCOUNTING SYSTEM (NGAS) MR. ANTONIO P. RETRATO,CPA Chief Accountant ODC, PNP

2. NEW GOVERNMENT ACCOUNTING SYSTEM Pursuant to the Commission on Audit Circular No. 2001-004 dated October 30, 2001, all government agencies were prescribed to use the New Government Accounting System (NGAS) effective January 1, 2002. The NGAs is a simplified set of accounting concepts, guidelines and procedures designed to ensure correct, complete and timely recording of government financial transactions, and productions of accurate and relevant financial reports.

3.  GOVERNMENT ACCOUNTING -encompasses the process of analyzing, recording, classifying, summarizing and communicating all transactions involving the receipt and disposition of government funds and property, and interpreting the results thereof. (Sec.109, PD 1445)

4. OBJECTIVES OF GOVERNMENT ACCOUNTING(Sec. 110, PD 1445) 1. produce information concerning past operations and present conditions; 2. provide a basis for guidance for future operations; 3. provide for control of acts of public bodies and officers in the receipt, disposition and utilization of funds and property; and 4. report on the financial position and the results of operation of government agencies for the information of all persons concerned.

5. GENERALLY ACCEPTED GOVERNMENT ACCOUNTING PRICIPLES(Sec. 112, PD 1445) • Accounts of an agency shall be kept in such detail as in necessary to meet the needs of the agency and at the same time be adequate to furnish the information needed • Highest standards of honesty, objectivity and consistency shall be observed. • The government accounting system shall be on a double entry basis with the general ledger in which all financial transactions are recorded. • The chart of accounts for government agencies shall be prescribe by COA.

6. GENERALLY ACCEPTED GOVERNMENT ACCOUNTING PRICIPLES(Sec. 112, PD 1445) • To permit effective budgetary control and to establish uniformity in financial reports, accounts shall be classified in balanced fund groups. The group for each fund shall include all accounts necessary to set forth its operation and condition. All financial statements shall follow this classification • Common terminology and classification shall be used consistently throughout the budget, the accounts and the financial reports. • The general accounting system shall include the budgetary control accounts for revenues,expenditures, and debt, as provided by PD 1177

7. BUDGETARY AND ACCOUNTING SYSTEMS Allotment Release Order (ARO) - This is a formal document issued by the Department of Budget and Management to the head of the agency containing the authorization, conditions and amount of an agency allocation. This maybe in the form of: a. Agency Budget Matrix b. Special Allotment Release Order

8. RECORDING OF ALLOTMENTS Upon receipt of the approved ABM and ARO, the designated Officer shall record the allotment in the respective registries through the Allotment and Obligations Slips (ALOBS). Separate registries shall be maintained for the four allotment classes by Program/Project/Activity (P/P/A), to wit: 1. Registry of Allotment and Obligations – Personal Services (RAOPS) 2. Registry of Allotment and Obligations – Maintenance and Other Operating Expenses (RAOMO) 3. Registry of Allotment and Obligations - Capital Outlay (RAOCO) 4. Registry of Allotment and Obligations – Financial Expenses (RAOFE)

9. REGISTRY OF ALLOTMENTS AND OBLIGATIONSPERSONAL SERVICES (RAOPS)_________________Agency PPA : ________ Sheet No. : _________

10. REGISTRY OF ALLOTMENTS AND OBLIGATIONSMAINTENANCE AND OTHER OPERATING EXPENSES (RAOMO)_________________Agency PPA : ________ Sheet No. : _________

11. REGISTRY OF ALLOTMENTS AND OBLIGATIONSCAPITAL OUTLAY (RAOCO)_________________Agency PPA : ________ Sheet No. : _________

12. REGISTRY OF ALLOTMENTS AND OBLIGATIONSFINANCIAL EXPENSES (RAOFE)_________________Agency PPA : ________ Sheet No. : _________

13. ACCOUNTING FOR OBLIGATION Obligation Defined – refers to a commitment by a government agency arising from an act of a duly authorized official which binds the government to the immediate or eventual payment of a sum of money. The agency is authorized to incur obligations only in the performance of activities which are in pursuits of its functions and programs authorized in appropriation acts/laws within the limit of the ARO. (Sec. 14, Vol. I, NGAS) Obligations shall be taken up in the Registries through the Allotment and Obligations Slip (ALOBS).

15. DISBURSEMENT Disbursement Defined – Disbursements constitute all cash paid out during a given period either in currency (cash) or by check. It may also mean the settlement of government payables/obligations by cash or by check. It shall be covered by Disbursement Voucher (DV)/Petty Cash Voucher (PVC) or payroll. (Sec. 27, Vol. 1, NGAS Manual) Disbursement System – The Disbursement System involves the preparation and processing of disbursement voucher (DV); preparation and issuance of check; payment by cash; granting, utilization, and liquidation/replenishment of cash advances. 

17. BASIC REQUIREMENTS FOR DISBURSEMENTS(Sec. 28, Vol. 1, NGAS Manual) • Existence of lawful and sufficient allotment certified as available by the Budget Officer; • Existence of a valid obligation certified by the Chief Accountant/Head of Accounting Unit; • Legality of transactions and conformity with laws, rules and regulation; • Approval of the expense by the Chief of Office or by his duly authorized representative; and • Submission of proper evidence to establish the claim.

18. CLASSIFICATION OF EXPENDITURES a.Current Operating Expenditures – refer to appropriations for the purchase of goods and services for current consumption or for benefits expected to terminate within the fiscal year. Current Operating Expenses are classified into:   1. Personal Services 2. Maintenance and Other Operating Expenses b.Capital Outlays – refer to appropriations for the purchase of goods and services, the benefits of which extend beyond the fiscal year and which add to the assets of government, including investments in the capital of government-owned and controlled corporations and their subsidiaries as well as investments in public utilities such as public markets and slaughter houses.

19. CLASSIFICATION OF EXPENSES a.Personal Services (PS) – include basic pay, all authorized allowances, bonus, cash gifts, incentives and other personnel benefits of officials and employees of the government. b.Maintenance and Other Operating Expenses (MOOE) – these accounts include expenses necessary for the regular operations of an agency like, among others traveling expenses, training and seminar expenses, water, electricity, supplies expense, maintenance of property, plant and equipment, and other maintenance and operating expenses. c.Financial Expenses (FE) – these accounts include bank charges, interest expense, commitment charges, documentary stamp expense and other financial charges. It also includes losses incurred relative to foreign exchange transactions and debt service subsidy to GOCCs.

20. Pay & Allowances Claims DC Budget Div Unit DPRM FS/14th DC Fiscal Div DC Acctg Div DC Mgt Div COA • a. Submission of Supporting Documents b. Preparation of DV & review of supporting documents c. Preparation of Memo for DPRM • Examination/processing of DV • Review necessary requirements & request of fund release to DC • Issuance of NFA • Preparation of ALOBS/funding of DV • Certifies the ALOBS for Obligation • Pre-Audit • Issuance of NCA • Journalization/certifies the correctness of charges • Preparation/issuance of check • Counter-signing of check of Ex-O/DDC/DC • Signing & release of check • Review/recording of abstract • Post Audit 2 days 1 2 2-3 days 3 4 MOL 3 days 1/2 day 1 day 1 day 5 1/2 day 6 7 8 1 day 9 1 day 10 1/2 day 11 1 hour 12 13 14

21. DOCUMENTARY REQUIREMENTS First Salary • Appointment duly approved by appointing authority • Oath of Office • Statement of Assets and Liabilities • Certificated of service or daily time record • Certificate of assumption  Promotions and Salary Differentials • Approved appointment or notice of salary adjustment • Certificate of service or daily time record • Certificate of assumption/duty status • Payslip

22. Terminal Leave • Approved application for leave • Complete service record • Clearance from money, property and legal accountability • Copy of last appointment • Commutation order and certification of exigency of service

23. Lump-sum/Retirement Pay • Retirement Order • Service Record • Certificate of last payment • Money/property clearance • Non-pending case clearance from IAS/RIAS; Napolcom; Ombudsman • Statement of assets and liabilities • Latest salary adjustment/promotion order • Certification of deletion of CFC from Finance Center

24. Replacement Clothing Allowance • Unit Endorsement • Order of Entitlement • Certificate of Clothing Settlement • Statement of Service • Absorption /Appointment Order • Certificate of Duty Status

25. Reimbursement of Hospitalization • Unit Indorsement • Approved Report of Adjudication Board • Certificate of Duty Status from PAIS • Certificate of Non-payment signed by the Chairman Regional Adjudication Board (pers assigned with PROs) • Official Receipt (for Medicines) • Photocopy of PNP ID • Letter Request from Claimant • CS Verification Other Collaterals Allowances • Unit Endorsement • Order of Entitlement • Certificate of Duty Status • Roster of Personnel (in case of Cash Advances

26. M O O E End User AD, DC FD, DC MD, DC FS/14th BD, DC • PO/WO • Certifies availability of funds/signature of C, AD • Preparation of ALOBS • Certification of ALOBS • Pre-Audit (ICIS) • Request for inspection for the delivery • Inspection • Processing of DV • Pre-Audit of DV (CES) • N C A • Journalization Exam of DV Final Exam • Issuance of checks DC countersign D,FS sign Releasing 1 2 1 day 3 4 1 day 1 day 5 6 1 to 2 days 1 day 1 to 2 days 7 8 9 10 min/claim 10 11 1 day 12

28. Travel – Domestic • Travel order • Approved Itinerary of Travel • Certificate of Appearance • Certificated of Travel Completed • Tickets Note: For Foreign travels, the requirements are the same as enumerated above except that the travel authority would come from the SILG or Office of the President. Training and Seminar Expenses • Memorandum/Directive of Seminar • Contract • Original Invoice • Delivery Receipt • List of Participants • PNP Accreditation/Phil GePS • Certificate of Business

29. Water/Electricity/Telephone Expenses • Original Statement of Account Rent Expense • Contract • Statement of accounts • Certificate of Liability from the End-user • Official Receipt in case of reimbursements

30. Purchases or Printing of Forms • Requisition and Issue Slip (RIS) • Supply Availability Inquiry (SAI) • Purchase Request (PR) • Reasonableness of Price • Certificate of Inspection and Acceptance Report • Management Inspection Report • Original Invoice • Original Delivery Receipt • Purchase Order • PNP Accreditation/Phil GePS • Certificate of Business Name

31. PURCHASE OF SUPPLIES • Requisition and Issue Slip (RIS) • Supply Availability Inquiry (SAI) • Purchase Request (PR) • Reasonableness of Price • Certificate of Inspection and Acceptance Report • Management Inspection Report • Original Invoice • Original Delivery Receipt • Purchase Order • PNP Accreditation/Phil GePS • Certificate of Business Name

32. EMERGENCY PURCHASE • Canvass papers • At least 3 price quotations from bonafide dealers • Certificate of emergency purchase PURCHASE THRU EXCLUSIVE DISTRIBUTIORS • Certificate of exclusive distributorship • Certificate that there are no sub-dealers selling at lower prices and that no suitable substitute are available PUBLIC BIDDING • Abstract of bids supported by winning bidder’s offer and bid tenders of other participants • Letter of award/acceptance • Performance bond of winning bidder

33. Repair of Equipment/Vehicle • Notice to Proceed • Certificate of Completion • Original Invoice • Original Delivery Receipt • Guaranty of the Repairman • Certificate that damage is due to fair wear & tear and not to negligence • Work Order • Report of Waste Material • Management Inspection Report • Inspection & Acceptance Report • PNP Accreditation/Phil GePS • Certificate of Business Name

34. Repair of Equipment/Vehicles • Notice to Proceed • Certificate of Completion • Original Invoice • Original Delivery Receipt • Guaranty of the Repairman • Certificate that damage is due to fair wear & tear and not to negligence • Work Order • Report of Waste Material • Management Inspection Report • Inspection & Acceptance Report • PNP Accreditation/Phil GePS • Certificate of Business Name

35. Repair of Buildings/Facilities • Notice to Proceed • Certificate of Completion • Original Invoice/Billing • Contract • Certificate of Final Inspection & Acceptance • Estimate Cost/ Bill of Materials • Pre & Post Repair Inspection/Management Inspection Report • Inspection & Acceptance Report • PNP Accreditation/Phil GePS • Certificate of Business

36. BUILDING • Contract • Notice to Proceed • Certificate of Completion • Billing/Invoice • Estimate Cost/Bill of Materials • Plans and Specification • Progress Report • Pre and Post Repair Inspection • PNP Accreditation/Phil GePS • Certificate of Business Name SUCCEEDING PAYMENTS • All requirements mentioned above • Management Inspection Report FINAL PAYMENT • All requirements mentioned above • Management Inspection Report • Certificate of Final Inspection & Acceptance • Contractor’s Affidavit Re-payment of Laborers

37. EQUIPMENT/MOTOR VEHICLE • Requisition and Issue Slip (RIS) • Supply Availability Inquiry (SAI) • Purchase Request (PR) • Reasonableness of Price • Certificate of Inspection and Acceptance Report • Management Inspection Report • Original Invoice • Original Delivery Receipt • Purchase Order • PNP Accreditation/Phil GePS • Certificate of Business Name •  Acknowledgement Receipt for Equipment

38. PREPARATION OF THE TRIAL BALANCE AND OTHER FINANCIAL STATEMENTS In preparing the Trial Balance and other Financial Statements, these Basic Features and Polices of the New Government Accounting System are observed (Sec. 4, NGAS Manual): a. Accrual Accounting – a modified accrual basis of accounting shall be used. Under this method, all expenses will be recognized when incurred and reported in the financial statements in the period to which they relate. Income shall be on accrual basis except for transactions where accrual basis is impractical or when other method is required by law.

39.  One Fund Concept – this system adopts the one fund concept. Separate fund accounting shall be done only when specifically required by law or by donor agency or when otherwise necessitated by circumstances subject prior approval of the Commission. •   Chart of Accounts and Account Codes – a new chart of accounts and coding structure with a three-digit account numbering system shall be adopted. • Books of Accounts – all national agencies shall maintain two set of books, namely: Regular Agency (RA Books) – books used to record the receipt and utilization of Notice of Cash Allocation (NCA) and other income/receipts which the agencies are authorized to use and to deposit with Authorized Government Depository Bank (AGDB) and the National Treasury. National Government (NG) Books – these shall be used to record income which the agencies are not authorized to use and are required to be remitted to the National Trasury.

40.  The following statements shall be prepared:  Balance Sheet  Statement of Government Equity  Statement of Income and Expenses  Statement of Cash Flow •    Two-Money Column Trial Balance Trial Balance - The Trial Balance shows the equality of debit and credit balances of all general ledger accounts as of a given period. It is prepared and submitted monthly, quarterly and annually at the end of the fiscal year, the pre-closing and post-closing trial balances shall be prepared. These reports are submitted to the following offices:   - COA - Accountancy Office - DBM - Senate and Congress for Budget hearing

41. Purposes of the Trial Balance • Prove the mathematical equality of the debits and credits after posting; • Uncover errors in journalizing and posting; • Serve as basis of the preparation of the financial statements.

42. Books of Accounts •  Books of Original Entry 1.      Checks Disbursement Journal (CDJ) CDJ - MDS This journal is used to record/check disbursements based on the report of checks issued for payment of expenditures and/or prior year accounts payable prepared by the Disbursing Officers (Finance) and submitted to the Accounting Division. CDJ - CFC This journal is used to record monthly Pay and Allowances, monthly Initial Pension, Regular Pension, Mid-Year Bonus and Christmas Bonus printed by Computer Service.

46. 2.Report of Disbursements by Disbursing Officers   This journal is used to record disbursements out of Cash Advance based on the Report of Disbursement with the vouchers/payrolls and supporting documents submitted by the Disbursing Officers. 3.Cash Receipt Journal (CRJ) This journal is used to record all collections and deposits based on the Reports of Collections together with the duplicate copies of official receipts, remittance advices and deposit slips submitted by the collecting officers.

49. 4.      General Journal This is used to record transactions that cannot be recorded in any of the special journals. •      Books of Final Entry 1.      General Ledger - This is used to record transactions from different journals. 2.      Subsidiary Ledger - This contains the details or breakdown of the balances of the controlling accounts appearing in the General Ledger.